Photo: James Bombales
Things seem to be balancing out in the GTA housing market of late — sales were up 28 per cent month-over-month in March, after dropping significantly in January.
Still, the market is far cooler than it was this time last year. A whole 39.5 per cent cooler, in fact.
“[The Toronto Real Estate Board (TREB)] stated in its recent Market Outlook report that sales would be down from the record pace set in Q1 of 2017,” writes TREB president Tim Syrianos, in a recent statement. “Home sales are expected to be up relative to 2017 in the second half of the year.”
As sales continue to creep upwards, it’s worth asking if this more balanced market is here to stay, or if things will return to the frenzied pace we saw in early 2017. BuzzBuzzNews’ has rounded up the latest industry commentary to put things in perspective.
The market is back to balanced territory
Sales are down relative to last year, but so are listings, bringing the sales-to-new-listings ratio to 46.2 per cent in March. A ratio of between 40 and 60 per cent in considered balanced territory, with readings above and below indicating sellers and buyers markets, respectively.
“All in all, the [sales-to-new-listings ratio] is largely as expected…with March data cementing the notion that the pull-forward into December has been given up in the first quarter of the year,” writes TD senior economist Michael Dolega, in a recent note.
He’s referring to a jump in sales in December, as buyers rushed to get into the market before a new mortgage stress test came into effect on January 1. Since then, sales have predictably dropped off, and are only now starting to make their way back up, balancing out the market.
Affordability is doing better — for now
These days, the GTA housing market has become relatively more affordable. But one bank isn’t convinced it will stay that way.
RBC’s housing affordability measure for the GTA dropped 2.3 per cent last quarter to 75.1 per cent. But that’s still 75.1 per cent of a household’s income that would be required to carry the cost of the average home.
And RBC chief economist Craig Wright thinks affordability will begin to deteriorate again sooner rather than later.
“We expect the relief to Toronto ownership costs that ensued from the introduction of Ontario’s Fair Housing Plan to be short-lived,” he writes in a recent note. “Our view is that Toronto prices will bottom out sometime this spring.”
A lack of supply could change things for the worse
One of the reasons prices will likely make their way back up? A lack of available developable land and strong demand for new housing.
“There’s a lack of available land for developers, which constrains how much supply can be developed,” Ryerson Centre for Urban Research and Land Development Diana Petramala told BuzzBuzzNews earlier this week.
The majority of Toronto’s land is zoned for single-family homes, which makes it difficult to develop the density needed to meet demand.
“Regulation that allows for middle-density housing could address a lack of supply in the GTA,” she says.